Industrial projects involving foreign capital are governed by Foreign
Capital Investment Act promulgated under Royal Decree No. M/4 dated 2 Safar 1399
H. (January 1, 1979). Under Article 2 of this Act, foreign capital can enjoy the
concessions allowed in the Act only if it meets the following three
- The foreign capital is for investment in economic development
- The foreign capital is accompanied by foreign technical expertise.
- An industrial license has been obtained from the Ministry of Industry
and Electricity, upon the recommendation of the Foreign Capital Investment
The Ministry of Industry and Electricity Resolution No. 11/G/O dated
17/7/1410 H., corresponding to 12 February 1990 (replacing Resolution No. 952 of
4 Zul al Qa’dah, 1400 H.) considered the following five categories of
development projects as qualifying for foreign investment:
a) Industrial Development projects.
b) Agricultural Development
c) Projects for the Development of Health Services.
Projects for the Provision of Services.
e) Projects for Undertaking
However, Article Seven of the Resolution states the possibility that projects
not mentioned in the list of development projects (detailed above) may be
accepted on the proposal of the Foreign Capital Investment Committee.
Further, under this law, foreign investors can set up a project either
exclusively on their own or in collaboration with Saudi partners (joint
ventures). The rules of procedure for the implementation of the Law were issued
by the Minister of Industry and Electricity Resolution No. 323 of 10th Jumada
II, 1399 H., (1979).
The procedure for establishing industrial projects under Foreign Capital
Investment Law requires that foreign investors planning to establish an
industrial project in the Kingdom of Saudi Arabia should submit an application
to the Evaluation and Licensing of Industrial Project Department at the Ministry
of Industry and Electricity (see here for
address). This application
should provide information about the proposed project’s product, production
capacity, capital, location, etc. If the Department considers the project
feasible, it will provide the applicant with a License Application form. The
License Application form should be completed with all required data and
documents. A copy of the initial partnership contract between the Saudi and the
foreign investor must be attached to it. This is to prove that the foreign
partner has the required experience in the manufacturing and marketing of the
proposed products. The License Application form should be signed by the
applicants or their authorized agents and submitted to the Foreign Capital
investment Committee as follows:
A. Industrial Projects:
- The potential investor should indicate briefly the nature of the
proposed project in terms of proposed products, output capacity,
investment, etc. by writing to or visiting the Industrial Licensing
Department of the Ministry of Industry and Electricity to inquire into the
possibility of the project being considered for licensing.
- If there is a possibility that a license may be issued (depending on
considerations such as the installed capacity of established industries,
market situation, etc.), the potential investor will be provided with the
necessary forms by the Industrial Licensing Department to submit an
- In the event that there is no possibility of the proposed project
being considered for a license, due to lack of market, or for any other
reason, a letter will be sent by the Industrial Licensing Department to
the applicant informing him that the license application will not be
considered and giving the reasons.
- If the project can be considered for a license, the foreign investor,
and in the case of joint venture the foreign or local partner (as
authorized by the other), or the legally authorized representative, should
submit the license application to the Foreign Capital Investment Bureau,
with the appropriate documents.
B. Transportation Projects:
- Land and Maritime transportation projects (as listed in Article Five
of the Ministerial Resolution on Development Projects).
- Such projects require a license under the Foreign Capital Investment
Law (FCIL), before the company is registered and incorporated under the
- The foreign investor, and in the case of joint ventures, the foreign
or local partner (as authorized by the other ) or the legally authorized
representative, should submit the license application to the Foreign
Capital Investment Bureau, with the appropriate documents.
C. Projects for the provisions of services or undertaking
- The types of projects for the provision of services or for undertaking
contracts which involve foreign investment and for which licenses could be
considered are indicated in Articles 5 and 6 of the Ministerial Resolution
on Development Projects under FCIL.
- All such projects require a license before the company is registered
and incorporated under the Companies Law for such activities.
- Companies which are already licensed under the FCIL and are registered
and incorporated for certain services or contract work, and wish to
undertake new or additional services or contract work require an amendment
to the license previously issued.
- Foreign companies without a license under the FCIL, but which have
obtained temporary registration from the Ministry of Commerce for a
particular period to undertake a contract awarded by a Ministry or other
Government Agency, require a license under the FCIL to establish
themselves in the Kingdom for further contract work.
- In all such cases indicated above, the foreign investor, and in the
case of joint venture the foreign or local partner (as authorized by the
other) or the legally authorized representative, should submit the license
applications to the Foreign Capital Investment Bureau, with the
If the application is approved,
the applicant will receive the original license and a copy thereof will be sent
to the Ministry of Commerce (Department of Commercial Registration) where
further action for commercial registration of the company will be taken when the
licensee submits all the required documents including the Articles of